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The Arts Council has launched an investigation into claims of wrongdoing over The Oldie magazine’s application for a £15,000 grant for its Soho Literary Awards.

Richard Ingrams revealed last week that his departure was prompted by a dispute between him and publisher James Pembroke about the money.

Pembroke, who made the application, said the investigation was “inevitable given the publicity that has been created over the issue”.

Private Eye last week reported that Ingrams was concerned that Pembroke's application to the Arts Council contravened the body's rules and that, as the public face of the magazine, this would lead to bad publicity for him.

The Eye reported that Ingrams was concerned that the money was supposed to go towards a "new marketing executive salary", when actually it went towards paying the salary of the magazine's existing editorial assistant, who organises the festival as part of their job.

An email sent to staff yesterday by Pembroke, director Richard Beatty, shareholder David Kowitz and advisory board members John Brown, Rosie Boycott and Mark Ellen confirmed “the Arts Council are launching an investigation into their award to the Soho Literary Festival”.

It added: “Richard made no objection to our applying for the grant, and first raised an objection 11 weeks after the award was made, at a board meeting. After he sent two letters to us, James approached the arts council voluntarily about his objection. They wrote back to say it was 'absolutely fine.' When Richard continued to object, a special board meeting was called on May 1st. After 90 minutes of discussion, it was resolved there were no irregularities.

“James will be contacting the Arts Council again tomorrow to help them with their investigation.”

An Arts Council spokesperson said: “The Arts Council, as a custodian of public money, take concerns about grants recipients very seriously, and will ensure they are thoroughly and appropriately investigated. This particular complaint could not be handled using the Arts Council's published complaints procedure, as it refers to the actions of a third party rather than the grant recipient itself. It has therefore been passed on to a Senior Manager in the Risk Management Team who will now investigate fully all matters surrounding this.

“Until that investigation has taken place it is inappropriate for us to release any further information in order to avoid jeopardising any action that we may choose to take arising from the conclusions of that investigation.”

Meanwhile, Oldie agony aunt Mavis Nicholson is said to have handed in her resignation from The Oldie today.

In the email sent by the board yesterday, staff were informed that “five out of 25-30” regular contributors have said they will no longer write for the magazine and “one out of nine staff”.

Including Nicholson, 13 contributors (though not all of them regular) have stopped writing for the magazine. Additionally, Sir Terry Wogan has said he will no longer be hosting The Oldie awards.

Ingrams’ replacement as editor, Alexander Chancellor, has not responded to requests to be interviewed by Press Gazette.

A well-placed source has suggested that the fact Chancellor, 74, has been appointed could hinder any attempt by Ingrams, 76, to claim age discrimination against the magazine as a factor in his departure.

Ingrams has publicly criticised the decision of Chancellor to take the job, and of The Oldie to offer it to him. But asked by Press Gazette who he would have liked to have taken over from him, had he left in less acrimonious circumstances, Ingrams said he could not have recommended anyone in particular for the job.

Comparing it to the situation he was in when he decided to step down as editor of Private Eye in 1986, he said: “I cannot say that there is anyone at the moment I have been thinking that this is the right person to take over. So I do not have another Ian Hislop.”

Asked if he supports the future success of the magazine he founded 22 years ago, Ingrams said: “I would do… But as things stand at the moment, its future is in doubt.

“As long as James is there it’s not looking good for the magazine,” he said, predicting that more staff members and contributors will leave.

“I cannot think that as long as Pembroke is there it will survive.”

Friends and contributors have suggested to Ingrams, who also co-founded and edited Private Eye, that he should start up a new title in the wake of his Oldie departure. Although for now he retains hope of returning to The Oldie, Ingrams (a self-confessed 'digital denier') has said he would consider launching an online-only title.